A Reuters poll released on Monday indicated that Egypt’s headline inflation rate, which reached a five-and-a-half-year high the previous month, is projected to slightly decline in April thanks to a favourable base effect, a stable currency, and lower commodity prices.
Annual urban consumer inflation was predicted by 13 analysts on average to fall to 31.0% in April from 32.7% in March.
According to Capital Economics, the rate of inflation decreased in April as a result of stable exchange rates since January, declining global commodity prices, and favourable base effects.
According to Capital Economics, April’s consumer pricing statistics will reveal that Egypt’s headline inflation rate slightly decreased to 31.4% year over year.
Nevertheless, it warned, “it will ramp up again in the coming months and the persistent pressure provides a significant upside risk, particularly if a further weakening of the pound drives prices higher.
From March 2022, Egypt has cut the value of its currency in half as a result of the economic weaknesses that Russia’s invasion of Ukraine exposed. The International Monetary Fund (IMF) granted the government a $3 billion financial assistance package in December.
The previous inflation record of 32.952% was reached in July 2017, eight months after Egypt devalued its currency by half as part of an earlier $12 billion IMF support package.
The high inflation puts pressure on the central bank to increase its overnight interest rate when its Monetary Policy Committee (MPC) next meets on May 18.
The MPC hiked rates by 200 basis points (bps) at its last meeting on March 30, bringing the deposit rate to 18.25%, to help tame inflation. This brought its total hikes since March 2022 to 1,000 bps.
The state statistics agency CAPMAS is scheduled to release February inflation data on Wednesday morning.